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THE SMUGGLING OF ART, AND THE ART OF SMUGGLING:UNCOVERING THE ILLICIT TRADE IN CULTURAL PROPERTY AND ANTIQUES
Raymond FismanShang-Jin Wei
Working Paper 13446http://www.nber.org/papers/w13446
NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts Avenue
Cambridge, MA 02138September 2007
We thank Daron Acemoglu, Ben Olken, Zhi Wang, and particularly Patty Gerstenblith for very helpfuldiscussions, and Andre Heng and Chang Hong for superb research assistance. The views expressedherein are those of the author(s) and do not necessarily reflect the views of the National Bureau ofEconomic Research.
2007 by Raymond Fisman and Shang-Jin Wei. All rights reserved. Short sections of text, not toexceed two paragraphs, may be quoted without explicit permission provided that full credit, including notice, is given to the source.
The Smuggling of Art, and the Art of Smuggling: Uncovering the Illicit Trade in CulturalProperty and AntiquesRaymond Fisman and Shang-Jin WeiNBER Working Paper No. 13446September 2007JEL No. F1,K42,O1,Z11
We empirically analyze the illicit trade in cultural property and antiques, taking advantage of differentreporting incentives between source and destination countries. We thus generate a measure of illicittrafficking in these goods based on the difference between imports recorded in United States' customsdata and the (purportedly identical) trade as recorded by customs authorities in exporting countries.We find that this reporting gap is highly correlated with the corruption level of the exporting countryas measured by commonly used survey-based indicies, and that this correlation is stronger for artifact-richcountries. As a placebo test, we do not observe any such pattern for U.S. imports of toys from thesesame exporters. We report similar results for four other Western country markets. Our analysis providesa useful framework for studying trade in illicit goods. Further, our results provide empirical confirmationthat survey-based corruption indicies are informative, as they are correlated with an objective measureof illicit activity.
Raymond FismanGraduate School of BusinessColumbia University622 Uris Hall3022 BroadwayNew York, NY 10027and NBERrf250@columbia.edu
Shang-Jin WeiGraduate School of BusinessColumbia UniversityUris Hall, Room 6193022 BroadwayNew York, NY 10027-6902and NBERshangjin.firstname.lastname@example.org
The smuggling of antiques and cultural property is thought to be big business. All countries
impose restrictions on the export of various classes of cultural property and antiques,1 ranging
from archeological objects to coins to older art works.2 Hence their sale abroad often requires their
illegal export from the country of origin. As with other activities of questionable legality, however,
it has been difficult to put a precise figure on the full extent of trafficking in cultural goods. For
trade in antiquities (unearthed ancient objects), which makes up only one component of the total
illegal trade in cultural objects, estimates ranging from $300 million up to $6 billion per year
(Atwood, 2004). According to Interpols estimates, the antiquities trade on its own ranks behind
only drugs and arms in its scale of illegal trafficking (Toner, 1999). Collectively, these illicit
activities represent the darker side of globalization smuggling requires extra-legal activities that
may abet corruption, impose a strain on international relations, and potentially dampen the gains
from legitimate international trade.3 Thus, illicit trade is an important element of political economy
and international trade. Unfortunately, we have little systematic knowledge of the dynamics of
illicit trade, as data on illegal activities are by their very nature difficult to obtain.
In this paper, we analyze the illicit trade in cultural objects by taking advantage of a unique
aspect of their trade relative to other forms of smuggling: The stark difference in the legality and
legal enforcement of a particular shipment between exporting and importing countries. In
particular, the exportation of broad classes of cultural objects is prohibited by most countries
without a special permit. However, once these (illegally) exported goods have left the country of
origin, they are not generally regarded as contraband when imported into their destination, absent
additional agreements that we discuss below (Gerstenblith, 2008). In the United States specifically,
there is actually a strong incentive to report accurately on the importation of cultural objects: Any
goods entering the United States that are not properly declared are subject to customs seizure;
further, the zero tariff rate on antiques and cultural objects entering the country removes any
incentive to misdeclare valuation (U.S. Department of Homeland Security, 2006). Even in cases 1 Henceforth referred to simply as cultural objects or antiques. Throughout this paper we will be considering those products that, by international trade classification, belong to Harmonized System (HS) Product Code 9706 Antiques of an age exceeding one hundred years. 2 The specific classes of objects that are restricted from export as well as the rules for gaining permission to export restricted objects differ across countries. The rules defy simple categorization or measurement of restrictiveness. See Prott and OKeefe (1988) for the most recent comprehensive description of these laws worldwide. 3 See Andreas (1998) for an overview of these issues.
where importation is of questionable legality, differences in the burden of proof between exporting
countries and the U.S. generally allow for the relatively easy import of goods whose export would
not have been permitted by the source country.
As a result of these asymmetric reporting incentives, reported imports of cultural objects
into the United States provide a plausible measure of the true level of trade in these goods that
we may compare with the export levels reported by cultural object-rich countries. The difference
between these two trade figures provides a credible measure of illegal exports.
What allows for the illicit export of cultural objects from the source country? Not
surprisingly, when smugglers are apprehended and their operations exposed, their activities are
often found to be facilitated through the bribing of customs officials to look the other way (Brody
et al, 2000). Hence, the illegal and unreported export of cultural objects is relatively easy in
countries with corrupt bureaucracies that allow for this type of transaction. Hence, if cross-country
survey-based measures of corruption do indeed reflect underlying corruption realities, these
measures should be good predictors of patterns of global trafficking in cultural objects. In this
sense, we may use our measure that is derived from objectively measured trade data to assess the
validity of these corruption indices that are often based on subjective perceptions.
In this paper, we present an objective measure of smuggling in cultural objects based on
this reporting gap between recorded exports on an exporters side and the recorded imports by U.S.
Customs. Without smuggling (and measurement error), the reporting gap should be zero. If the gap
were pure measurement error, it should not be correlated with country-level attributes. However,
we find that our smuggling measure is very highly correlated (with correlation coefficient =0.52)
with standard cross-country survey-based corruption indices, thus providing compelling and
objective validation of these indices. This pattern is robust to the inclusion of region effects and
controls for countries endowment of desirable/collectible cultural objects. Interestingly, our
smuggling variable is uncorrelated with the log of income per capita once the exporters corruption
level is controlled for, so it is unlikely that we are simply picking up the effects of country-level
Several additional tests lend further support to our interpretation of the results. First, the
corruption-smuggling gap relationship is stronger for object-rich countries. Second, we run a
placebo regression using data on the reporting gap in the U.S imports of toys between the
exporters and US customs (U.S. reported imports of toys from a country, minus that countrys
reported exports of toys to the U.S. in the same year). Similar to imports of cultural objects into the
United States, toy imports also have a zero tariff rate on the U.S. side. In this case, we observe no
correlation between an exporters corruption level and the customs reporting gap, suggesting that
cultural objects do indeed present a special case. Finally, we report results for four other countries
Canada, Germany, Great Britain, and Switzerland all with zero tariffs on cultural objects that
are also reported to have a significant trade in these goods; we find a positive relationship between
corruption and the smuggling gap for all four countries.
Our paper thus makes two primary contributions: Most importantly, we provide a first
empirical analysis of the trade in restricted goods, and further provide comparable cross-country
estimates on the smuggling of contraband. 4 We thus contribute to the growing literature on
measuring underground activities using differential reporting incentives (see, for example, Fisman
and Wei, 2004; Yang, 2007; Mishra et al, 2007). However, we highlight two key departures from
the prior literature: First, earlier studies have largely focused on a single exporting country;
second, previous research has focused on tariff evasion rather than the trafficking of illegal objects.
By contrast, cultural objects imports face no tariffs in the U.S. and other major markets (hence
tariff evasion is not the motivation) but are often subject to export controls in the country of origin.
Second, we provide a clear validation of subjective corruption indices based on objective trade
The rest of this paper is organized as follows: Section 2 provides a short background on
laws governing the trade in antiques and cultural goods. Section 3 provides a description of the
data, and Section 4 presents our results. Section 5 concludes.
2. Legal background on international trade in cultural property and antiques5
Goods that have been illegally exported from one country are not generally regarded as contraband
when imported into the United States, absent some further agreement.6 In the case of cultural
4 Another related paper is Fisman and Miguel (2006), who using parking violations of U.N. diplomats in New York as a cross-country measure of corruption norms. Relative to that study, our method has the advantage of focusing on customs, a much larger (and often notoriously corrupt) branch of the civil service in many countries. 5 This section draws heavily on Borodkin (1995) and Gerstenblith (2008). We provide only a cursory discussion here; please see these references for further details. 6 In fact, the Department of Homeland Securities guidance to importers makes this point explicitly. See http://www.cbp.gov/linkhandler/cgov/toolbox/legal/informed_compliance_pubs/icp061.ctt/icp061.pdf (downloaded April 2, 2007) for further details.
objects there are some limited, albeit important, statutes that do provide some constraints on the
importation of some classes of goods. However, as we discuss below, these constraints are
generally quite limited.
Trade in cultural property is covered in the United States by the Convention on Cultural
Property Implementation Act (CPIA). In the CPIA, cultural property is defined as objects,
collections, specimens, structures, or sites identified as having artistic, historic, scientific,
religious, or social significance.7 The CPIA is the result of the 1970 UNESCO Convention on the
Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of
Cultural Property, an international agreement intended to control trade in cultural property. This
agreement required that signatories take steps to make illegal the importation and/or sale of
cultural objects that were removed illegally from any country that was party to the Convention. It
was ratified by the United States in 1972, but required further action by the Congress before its
statutes became law. This was done in a very limited form through the CPIA, resulted in the
implementation of just two sections of the UNESCO convention.
First, the CPIA prohibits the import into the United States of stolen objects that had been
documented in the inventory of a public or secular institution in countries that are signatories to the
Convention. Second, the CPIA grants the President the authority to impose further import
restrictions on specific types of objects through bilateral agreements with other countries. The
other nation must request such an agreement. The United States has signed twelve agreements, and
in eight cases there is variation during 1996-2005.8 However, the existing agreements have mostly
addressed trade only for a narrow range of objects (e.g., Pre-Columbian artifacts from the Petn in
Guatemala and Pre-Classical and Classical archaeological objects in Cyprus). Further, the CPIA
provides only for civil forfeiture of the products in questions and has no criminal penalties. Thus,
overall, the CPIA has very limited coverage and weak punishment.
The U.S. National Stolen Property Act (NSPA) criminalizes the knowing transport, receipt,
and possession of stolen property worth more than 5,000 dollars across international (or state)
7 See Article 1 of the UNESCO Convention for the full definition of cultural property, available at http://www.unesco.org/culture/laws/1970/html_eng/page2.shtml (downloaded on April 17, 2007). 8 We did examine whether the gap between reported exports and imports of antiques and cultural property was affected by the signing of these agreements. Our specifications generally produced coefficients that were consistent with a decreased gap in response to a treaty. However, the results were generally not significant and very sensitive to specification and classification of initial year of treaty and emergency agreements. This is not surprising given the very narrow focus on archaeological objects, the small sample size and the noise in the data. Given the difficulties in interpreting these results, we do not focus on them in this paper.
boundaries. The NSPA provides harsher penalties than the CPIA. An individual who knowingly
engages in this conduct can be criminally prosecuted. This effectively allows for the prosecution
for trafficking in objects that can be proven to have come from known collections in a foreign
country. More substanti...